Your returns improve when you invest for a longer period. No matter the type of investment you choose — equities, mutual funds, bonds, conventional deposits, or any other scheme — they perform better when they are held for a long tenure. Two particular programs stand out because they are long-term saving-cumulative investment solutions even though they are distinct from one another. These are the National Pension System (NPS) and Public Provident Fund Account (PPF) programs. Can an investor become a crorepati with these two plans, though?
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Bexley Advisors’ Managing Director, Utkarsh Sinha, stated: “Both NPS, and PPF help to reach objectives; the decision is whether you choose the predictability (and safety) of a PPF or the return potential (and volatility and risk) of an NPS. Let’s know about NPS and PPF accounts.”
PPF accounts provide investors with a triple threat of security, guaranteed profits, and tax advantages. PFF is viewed as a tool to help people accumulate wealth for their retirement. PPF is the safest method of investment because it is guaranteed by the government and provides a guarantee on investments.
Investors can receive an annual return on their investments of up to 7.1%. Under the PPF account, investments from Rs 500 – 1.5 lakh in a fiscal year are allowed. With PPF, an investor can pay a maximum of 1.5 lakh rupees in multiples of 50 installments.
NPS account:
NPS is a voluntary retirement savings scheme to make contributions towards securing the future in the form of a pension. NPS is seen as the world’s lowest-cost pension scheme as administrative charges and fund management fees are the lowest. Applicants can choose their own investment options and pension fund and see their money grow.
According to Bexley’s MD, NPS offers a broader selection for individuals to choose from. The fund’s performance is key to decision-making on where to invest. With PPF though, there is no selection process involved as the returns are already fixed.
Utkarsh Sinha said, “For any retail investor, the prudent decision is probably to go for a mix of fixed income and equity, and so a ratio of NPS and PPF – depending on one’s age and goals – is probably the best way to go.”
